Bitcoin, RWAs and institutional adoption among key themes for 2024: Binance Research

Binance Research analysts outlined eight areas they anticipate significant progress on throughout this year — including the Bitcoin BTC -0.87% ecosystem, artificial intelligence, real-world assets and institutional adoption.

In 2023, the crypto market witnessed a significant rebound, with a 109% increase in market cap, amid optimism surrounding spot bitcoin exchange-traded fund approvals and a favorable macro environment, the analysts wrote in a report published today. Bitcoin regained its dominance, and Layer 2 solutions saw a 321% rise in total value locked. The decentralized finance sector also grew notably, fueled by innovations in liquid staking tokens and the integration of real-world assets, they said.

Conversely, the global stablecoin market saw a 5.2% decline in market cap, with Tether's USDT maintaining a dominant position. Non-fungible tokens experienced a surge in the last quarter, led by Bitcoin NFTs. On-chain gaming activity doubled in active wallets by the year's end, reflecting a resurgence in this sector. Meanwhile, web3 projects attracted 1,173 investments, totaling $9 billion in 2023 — mainly in infrastructure — signaling the potential for ongoing recovery and growth in the ecosystem this year, the analysts added.

Bitcoin, AI, RWAs and institutional adoption

For 2024, Binance Research expects Bitcoin narratives to stay at the forefront, driven by developments like Ordinals NFTs and BRC-20 tokens, the liquidity injection of spot bitcoin ETF approvals recognizing bitcoin as a “legitimate asset” and the upcoming halving event — when the block reward for Bitcoin miners gets cut in half. While not a direct cause-and-effect relationship, halving events have often preceded substantial bull runs in the bitcoin market — with the next one potentially less than 100 days away.

The analysts also expect institutional adoption of crypto to accelerate this year, with the “entrance of reputable traditional asset management giants such as BlackRock and Fidelity into crypto during the bear market testament to their belief in the long-term potential of the industry.”

Artificial intelligence's integration with crypto is another area poised for growth in 2024, catalyzed by the popularity of applications like OpenAI's ChatGPT. Such integration is still in the early stages but offers potential use cases in trade automation, predictive analytics, generative art, decentralized autonomous organization operations and decentralized storage for AI model training, according to the analysts.

Real-world asset tokenization is another identified theme for 2024. RWA tokenization is gaining momentum due to its ability to bring off-chain assets onto blockchains, offering greater transparency and efficiency. Tokenized treasuries are likely to continue to be an attractive investment while interest rates remain elevated, the analysts said. “Additionally, alongside the accelerated institutional adoption of RWAs, developments in related infrastructures such as decentralized identity, oracles and interoperability solutions are also expected to gain momentum,” they added.

Other themes Binance Research identified for the year ahead include a thriving on-chain liquidity landscape, continued emphasis on security improvements, ownership economy applications traction, such as decentralized physical network infrastructure (DePin) and decentralized social media, plus account abstraction gaining importance in simplifying and enhancing the user experience of blockchain technology.